Katsu Curry Index Suggests Yen is Heavily Undervalued

A new index measuring currency values by comparing katsu curry prices across countries suggests that the yen is heavily undervalued in the market. The 'Katsu Curry Index' was created by Jeff Yu, a senior strategist at Bank of New York Mellon (BNY), who argues that this method better reflects Japanese consumers' actual purchasing power than the Big Mac Index.

The Katsu Curry Index compares prices of katsu curry from CoCo Ichibanya, the world's largest curry-rice chain, across countries. According to Yu, the exchange rate matching the yen's purchasing power came to 62.18 to the dollar, which is significantly stronger than its current market level nearing 160.

The weak yen has become a major focus in global currency markets recently, with U.S. and Japanese authorities intervening jointly last month after the yen fell to its lowest against the dollar in 40 years. Despite a sharp rebound, downward pressure on the yen has continued, with Yu warning that if even basic food items like katsu curry or ramen become hard to afford in Japan, calls for a policy change will grow louder.